Living in a smaller home to have more $$?

**Heracles** · 05-16-2009, 02:42 PM

Hi everyone. So I did a search to find some people that are thinking like me and here is where I ended up!

My wife and I had started a business a few years ago that didnt work out, and we are finally almost down to a year till we pay off almost all of our debt. Our income has gone up and monthly payments have fallen.

We are in our first home; 5 years now, great location, 3 br 1 bath ranch with a walkout basment. Our mortgage and taxes together are $1000 a month (bought the home for $135K, worth about $190K now)

I was thinking about moving up to a bigger home (~$280,000 and $6000 annual property tax) This would bring us about $1500 a month mortgage and another $500 a month property tax..so double what we are now..

Im trying to decide if it would be better to stay in our home, and build lots of savings, wealth and comfort- or if I should sell and put the money we get out of this house as down payment for our next home- wich would have us living kind of tighter...but we would be ok. Our household income is $135K..I dont know who is better off? The people that have the smaller home, and more money in their account- or the people that have the nice home, but have to be careful with spending...?

**Debbie-cat** · 05-16-2009, 03:13 PM

I guess it all depends on what you really want. Do you want to be straddled with a higher debt and not be able to stockpile or do things you enjoy? I have lived in both a large home and a small home and I choose a smaller home. If I ever get ill, disabled or lose my job, I would be okay with a smaller home, smaller payments and don't have to worry as much. I am sure you and your wife will make the right decision for yourselves. Whatever you do decide, I wish you alot of luck! Keep us posted.

**Momto2Boyz** · 05-16-2009, 03:14 PM

We do. We originally purchased our house thinking it would be our "starter" home. But once we got thinking about it, why should we move to a new, bigger home to accomadate the kids when they'll be gone in 10 years or so, and we'll be looking to downsize again.

We just decided to stay put and keep our extra money in our pocket! We have 900 square feet, which I'm sure seems small to alot of people, but it actually works really well for us!

**forHISglory** · 05-16-2009, 03:29 PM

I grew up in a big old farmhouse and I now live a big house. So I am very comfy with the big house concept and we use it in many ways. We entertain a lot, we have a lot of overnight guests, etc.

What I'm getting at is that a choice like this is complex, based on many factors. Money is only one factor. Others would include use, cleaning, entertaining, resale value, future plans, etc.

Sounds like you are doing a good job of starting to think your way through this question.

**onencgirl** · 05-16-2009, 07:40 PM

I've always preferred a smaller home. They are so much more cozy. I hate clutter and smaller homes prevent having too much stuff. I believe in having just what you need, any more is a waste.

**gapeach** · 05-16-2009, 08:06 PM

I think I would weigh the want verses the need. We purchased a "fixer upper" 9 years ago with the intention of selling it after 5 or 6 years. We realized we didn't need a different house, we wanted a different house. When we looked at other homes that we thought we liked we didn't like the mortgage that went with it. The home we have is enough room for us and the neighborhood is great and we're in a great location. And with our frugal lifestyle it's almost paid for.

**Persimmon Lace** · 05-16-2009, 08:19 PM

If you are in debt and wanting to get rid of it, staying in a home that you are able to afford and just a little tight I would stay in the smaller home. Sometimes it is about the money. What we today consider starter homes were the homes we grew up in and is one of the reasons why people got into so much mortgage debt. Once you are totally debt free why not revisit the issue then.

**The Muse** · 05-17-2009, 09:16 AM

DH and I have chosen to stay in our first house instead of trading up. We're 34 and aren't having kids, so a 2,000 square foot colonial is enough for us.

We'll have this place paid off in a little over a year and though it's tempting to trade up, we don't really need the space. It will feel amazing to have the freedom to leave the rat race if we want to. If we decide to keep working, we'll buy a second home, or wait and eventually buy the hobby farm we've been dreaming about. Either way, jumping into another mortgage in the near future isn't going to enhace our quality of life at all.

I guess it depends on what you value, what you want, and how well your current house supports your lifestyle. I'd prefer money in the bank and peace of mind, but I'm definitely in the Millionaire Next Door camp on these things.

**peanut** · 05-17-2009, 06:42 PM

Well, we're kind of at the other end of the stick. We bought a bigger home because we live in a colder climate and we were thinking the kids need space to run around in the winter. BUT, the kids have left home. Now the house is too big. We're planning to downsize. But even a 1100 sq. ft. bungalow with basement will be bigger than this place square footage wise. It's just a weird shaped old house.

I guess what you do depends on your needs and your wants. Why are you considering buying a bigger house? Think of all the lifestyle the extra money can buy. Especially if you don't have kids and plan to have them...or have them. I think providing a good education to kids is far more important than living in a big house. But then that gets into your priorities...which depends on your values.

Whatever you decide, best of luck.

Jean

**Monroe on a Budget** · 05-17-2009, 07:40 PM

When we bought our house, prices had gone up so fast our choices were limited. We got a small home that had everything we needed, but not some of the extras we could have had with the bigger houses.

People said "it's your starter house."

My husband and I didn't want to go through all that grief again, and we realized this home would suit us well in retirement anway.

So, this ain't no starter house. It's the only house.

**mopples** · 05-17-2009, 07:53 PM

We dont own a place, but do rent. We will be looking for a new place in the next month or so.

Originally we were going to look for a 2-3 bed house for around $400-$450 per week. But now things have changed. Im applying for part-time uni next year and OH's business can be a bit up and down. So now we are looking at a 2 bed flat/apartment for $300-$350 per week. I did now want to live in an apartment again, but going to uni etc means making sacrifices.

We are now not having children until i have finished either, so we will upgrade into something bigger at that time.

**zakity** · 05-17-2009, 11:42 PM

We have a 1024 sq ft house with 5 people and 5 cats in it.

**Mckeekitty** · 05-18-2009, 12:49 PM

I believe "smaller house, smaller problems...bigger house, bigger problems."

More square footage requires more energy to heat/cool. Requires more furnishings. Requires more maintenance. Requires more money. Requires more, more, more.

It is, of course, a personal decision. But we enjoy living in our small cottage (550 square feet...only the 2 of us and our cats and dog). We replaced the roof five years ago in two days! We've never embraced the "upgrade" attitude. We're comfortable. We have a barn if one of us feels the need for space.

**Preston** · 05-20-2009, 02:01 AM

bigger house = bigger utility bills, higher taxes, and more hassle. Not to mention all those closing costs ...

you may be able get a good deal now with the way the real estate market is right now... but if what you have is sufficient why change? Add on to your house if you want.

We are buying our first house now and our mortgage broker and I have talked extensively and although I have enough money for 20% down, we have found that through FHA we get better loan terms for the mortgage and I can put 10% down and save the cash for in case we need it. Things are so uncertain right now, and the more cash you have the better. Save your money for retirement... use your money to make money.

If what you have is sufficent, then it's only a matter of what you WANT instead of NEED

**Thevail** · 05-20-2009, 02:50 AM

We just bought a house.. not small, but not big either.

The upstairs is a bit smallish for the kid and all her friends and all our friends etc, at 1100 sq. ft.

But we got the house at a great price because it has a 700 sq. foot unfinished basement.

We looked at bigger houses, but liked the neighborhood better with this one. Another factor for us was that our kid was 14 when we bought the house, she's 16 now.. she'll be 18 in another 2 years... so, the house will be HUGE for just the two of us in only a few years.

Also others were correct about the bills growing exactly in proportion to the house. And it isn't just heating bills.

Replacing the furnace for a 2000 sq. ft. house is much less money than replacing one that will service a 4000 sq. ft. house. Roofing is a similiar story as is replacing windows, carpets etc.

The problem from our perspective is also that a higher payment leaves less room in the budget for all those bigger bills.